No Limit
September 23rd, 2008 by 
reality
I’ve been talking about a $700 billion bailout. That’s wrong. It is an UNLIMITED bailout. The $700 billion is just the maximum that the Treasury can hold at any one time. So Paulson and Bernanke can buy unlimited amounts of paper by simply reselling it (at a loss, of course), so long as they don’t have more than $700 billion in inventory at any one time. Outrageous. Some good questions for Paulson and Bernanke.
Quite apart from anything else, the ignorance of the Fed got us into this trouble. What makes anyone think that their ad-hoc antics are likely to get us out?
Posted in Fixed Income, Government, Rogues and Rascals, The Fed, The Fisc | 
September 23rd, 2008 at 7:23 am
Kind of ironic that a big part of what got us into this mess was Fannie and Freddie allowing lenders an endless ability to lend by purchasing their loans and restoring their lending power, now we are going to solve the mess by allowing Paulsen the exact same ability. Whatever.
September 23rd, 2008 at 9:45 am
Yes, it would be nice to see increased transparency, less financial complexity, and a reward for responsibility and saving but we have to face the facts. Our votes and our complaints don’t matter.
The only way that that we can affect the system is to pull our money out of the system. A run on the system would get their attention but I suspect that they would respond in the wrong way (more liquidity, more shell games, and if you won’t pay nicely then you will pay anyway via higher taxes).